P-14-5 Comparison of ABC and Tradition Costing; Three Products. The Tunney Company produces three products. Normal, Enhanced, and Super. The Company uses a costing sys- tem that accumulates all overhead in a single cost pool and allocates it based on direct labor hours. Tunney's management has decided to implement ABC. A study revealed that significant amounts of batch-level overhead cost are incurred in requisitioning, retrieving, moving, and handling materials. The number of material requisitions was selected as the activity driver for this cost pool, and direct labor hours will still be used as the allocation base for all remaining overhead cost. Information concerning Tunney Company's most recent year of operations is as follows: Normal Enhanced Super Total Units produced.......... 30,000 1,000 50 31,050 Direct material: Cost per unit.. 2 S 20 $ 100 Total cost ...... $ 60,000 $20,000 $5,000 S 85,000 Direct labor: Hours per unit.. 1.5 4.5 10 Total hours ...... 45,000 4.500 500 50,000 Total cost (average pay rates differ) .... $300,000 $35,000 $5,000 340.000 Setups 150 100 50 300 Design changes ... 10 10 32 Material pounds ...... 26.900 4,100 1,800 32.800 Material requisitions..... 150 200 150 500 Overhead: Batch level $ 400.000 Other 600.000 Total overhead $1,000,000 14-29 Chapter 14 > Activity Accounting: Activity-Based Costing and Activity-Based Management Required: (1) Calculate the total and per-unit costs reported for each product by the existing costing system, using the format shown in Exhibit 14-3. (2) Calculate the total and per-unit costs reported for each product by the ABC system. using the format shown in Exhibit 14-4. (3) Reconcile the costs reported for Super by the two costing systems. Use columns for total and per-unit costs. (4) What percentage of Tunney's overhead is treated differently by the costing sys- tems? By what percentage did the cost of Super change as a result of the change in the system